Snapping up the big opportunities
In the world of technology, there are a l ot of new i deas but not necessarily the financial backing to take them forward. Standing out from the crowd is not easy. But one local company, Snapplify, has managed to get on the radar of AngelHub Ventures, a venture capital company backed by former First National Bank CEO Michael Jordaan and his former boss Paul Harris. AngelHub has invested an undisclosed amount in the company, which will be four years old in October.
Snapplify is an e-book aggregator, which a i ms to make available as broad a range of content as possible – from magazines, newspapers, f iction, textbooks, comics and sheet music to old exam papers. It already distributes for Penguin Random House, Pearson, Oxford and Cambridge.
“It doesn’t matter so much what it is, our aim is to make the process as simple as possible for the producers and readers and in the middle of all that is a business model,” says Wesley Lynch, the CEO.
Lynch and four other founders have been working together as a team for 15 years and this was the last in a series of endeavours, but the f irst time they have brought in formal institutional venture capital money and collaborated with bigger players. This is their f irst business to have gained mass consumer market share, with 1.9m readers.
“This is the most broad, diverse, ambitious endeavour,” says Lynch. Snapplify’s business has a bias towards English, African and emerging markets. About 20% of its business comes from the UK and US.
Textbooks, especially those used by private and international schools in Africa, are a big and growing part of its business. Different kinds of content are sold in different ways – from newspapers to books with a long shelf l ife and textbooks, which are subscribed rather than marketed. “Our approach is very different for each different circumstance. It also depends on the maturity of the market, market perceptions of how digital products are sold and availability of credit cards.”
In areas where people don’t have cards, Snapplify has developed prepaid cards subscribers can buy to access
THIS IS THEIR FIRST BUSINESS TO HAVE GAINED MASS CONSUMER MARKET SHARE, WITH 1.9M READERS.
“SOUTH AFRICANS LOOK FOR INNOVATION OUTSIDE SOUTH AFRICA. WE NEVER HAD A PROBLEM BEING TAKEN SERIOUSLY IN NEW YORK, BUT HERE WE HAVE ONLY BEEN TAKEN SERIOUSLY SINCE MICHAEL [JORDAAN]’S INVOLVEMENT.”
content. Content can take the form of PDFs, interactive e-books, video, and audio. Most private schools have e-textbooks or are piloting them.
“We a re not in t he i nfancy of adoption phase; we are just before the very vertical climb in adoption. This is the year of schools finding their feet and learning the lessons, and then we will see the big push.”
At t he FutureBook Innovation awards, Snapplify won the award for most innovative technology for its e-book distribution hardware, t he SnappBox. It works like a DStv decoder for e-books. It is used by schools, which download books once f rom source and store them locally on the device rather than in the cloud, for children to download. And if there is no internet connection, Snapplify can prepopulate the box. There are different sizes, but schools could store an entire curriculum collection on one box. SnappBox is the “delivery truck and warehouse” of the content. In most cases it provides the device for free, and makes money from the sale of the books.
The business has grown quickly. Lynch and his partners came up with t he Snapplify idea, built it out i n about three months and launched it at the Frankfurt Book Fair. “We were surprised at how ahead we were and how competitive we were in the market. We were lucky enough to spark interest with Random House, which signed up just before Frankfurt so we signed up customers immediately, and were generating revenue and were profitable immediately,” says Lynch.
One of the critical things that made Snapplify successful was the realisation of the need to strike while the iron is hot. They spun it out as a separate company, moved people around and invested money. “We pushed hard and when we were just four months old, we put an employee in London and then a guy in New York. We needed to be taken seriously as a global player quickly.
“We focused on being a global business f rom day one. A l ot of companies we work with, even South African publishers, travelled to New York and signed with us and then realised we were from South Africa,” he says.
Getting the AngelHub f unding provides money to grow. Lynch has been involved in the venture capital space for some years, helping other companies get funded and advising venture capitalists,
especially when there is a technology angle in a deal.
There had been contact with Jordaan and there “was respect and interest in what we do”. Then the timing was right to have the conversations. The deal was concluded in October last year, but only announced recently. “We have similar outlooks on what we want to achieve; entrepreneurship and education is important to him.”
Lynch will not reveal the amount of the AngelHub investment, but says it will substantially change the business’s prospects and it will get what it needs to maintain its pace. “We really are just around the corner from real adoption and you need to be in position to be in the right place at the right time, and making that mark is the difference between success and failure.”
Snapplify is not unique, there is competition. It is not something you can dive into with a bunch of techies, “it is quite new so there’s no best practices to draw on. A lot is frontier innovation.”
Big companies don’t have the agility as payment methods and consumer behaviour are changing so quickly. And those companies that are technically competitive are not very experienced in African markets. “Our technology might stand side by side, but we are so distant and foreign and off their radar. We have the context they don’t have, and the will.”
Lynch believes giving advice to aspiring entrepreneurs is difficult. With small and growing businesses, often good and bad decisions and strategies are exactly the same thing. Whether they were good or bad just depends on the outcome. Nevertheless, the cleverest thing they did was having the conviction to identify Snapplify as potentially high growth and spin it out.
“It can be daunting to do, but you have to do it – jump in with both feet or do not bother at all. We put a guy in New York when the rand was weakening and on paper it didn’t look like the right thing to do. Making those decisions… if it works then you are labelled clever and if it doesn’t you are idiotic.
“The biggest t hing for us is a conviction and even a confidence,” he says, adding that it is not necessarily good to be tentative or to try to do well in SA. Your mind has to be open to opportunities.
A huge challenge is earning respect in SA. “South Africans look for innovation outside South Africa. We never had a problem being taken seriously in New York, but here we have only been taken seriously since Michael’s involvement. Some clients meet our guy in New York, only to realise then that they could have driven down the road back in South Africa to get in contact with us. There is a lot of innovation in South Africa that we don’t recognise and celebrate.”
From left to right: Suhaifa Naidoo, Shaun Marshall, Robert Dionisio, Louan Jordaan, Deborah Butler, Elena Dotcheva, Garreth Williams, Roxanne de Swardt, Tarryn-Anne Anderson, Wesley Lynch, Linda Jooste, Shaine Gordon, Dane Woods, Tinotenda Mundangepfupfu